Facebook CEO Mark Zuckerberg will face the kind of public shaming in the week ahead that other CEOs before him have experienced. But time will tell if his shareholders will experience the similar fate of other high-profile CEO apologies.
Wells Fargo stock fell 18 percent in the days after being fined by the government for setting up accounts customers didn’t want. Two months later, and two CEO visits to Capitol Hill later, the stock had recovered.
Last year, when Equifax admitted it failed to protect the financial data of 145 million Americans, the stock fell 35 percent. By the time its former CEO apologized to Congress, the stock had regained about half of what it lost.
In both cases, the scandals cost the companies their CEOs. That is unlikely to be the fate for Facebook’s founder and CEO.
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Sure, Congress will use Zuckerberg’s appearances as opportunities to flog one of the world’s richest and youngest executives. Yes, Zuckerberg will pledge to do better and will probably acknowledge the need for some regulation (as he has in the past). But what this Facebook practice has laid bare is the basic business model of Facebook; collecting petabytes of personal information and then selling access. It is the most successful business model on the Internet. Just ask Google and even Amazon.
His testimony Tuesday and Wednesday will be the first time he has delivered it in person to Congress. He’ll likely take responsibility for Facebook allowing the personal information of tens of million of users to be shared with the political consulting firm Cambridge Analytica, and for data from most of its users to be scraped and used by third-party apps. “We’re an idealistic and optimistic company,” he told reporters on a conference call on April 4, “but it’s clear now that we didn’t do enough.”
You won’t hear any argument on that point from Facebook shareholders. The stock lost more than 10 percent in the past month. It has fallen to 10-month lows, costing shareholders almost $70 billion in lost market value.
The market has a way of imposing accountability while Congress convenes.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM; @HudsonsView.